An hour-long disruption could affect around 40 million UPI transactions.
Network disruptions caused by internet service providers (ISPs) powering India's flagship payments platform, Unified Payments Interface (UPI), hardware malfunctions, and the overloading of banks' transaction processing systems are likely behind the UPI outages over the past two weeks, according to sources.
Telecommunications (telecom) network fluctuations disrupted UPI services on March 26, leaving users across the country unable to process transactions on both banking and third-party UPI applications (apps) for over an hour.
A separate technical glitch affecting the software-defined wide area network (SD-WAN) led to another outage on April 2.
The success rate of UPI transactions dropped to 50-60 per cent, a source said, adding that the National Payments Corporation of India (NPCI), which operates UPI, carried out a 'root-cause analysis' and shared its findings with member banks.
In an interview with Business Standard, Dilip Asbe, MD and CEO, NPCI, said the platform faced intermittent technical issues that affected transaction success rates for about an hour on March 26.
"The issue was identified and addressed, and the system has since stabilised. A thorough root-cause analysis was conducted, and corrective measures -- including hardware replacement -- have been implemented to avoid a recurrence," Asbe said.
An hour-long disruption could affect around 40 million UPI transactions.
In March, UPI averaged 590 million transactions daily.
On March 26 -- the day of the first outage -- the network handled 550 million transactions, a 7 per cent drop from the 581 million processed the day before.
"ISPs power NPCI's data centres. It is rare for telecom networks to fail. Even with intermediary providers, running such a large network is difficult since those are relatively small players," said a person familiar with the setup.
ISPs facilitate data exchange between the payment network, users, and financial institutions, including payment service providers.
NPCI has built its data centres to host the information technology infrastructure it operates.
An SD-WAN is deployed to expand throughput and maximise the use of network links.
Industry participants said banks may need to ramp up server-side infrastructure to handle rising UPI traffic.
"Most banks are now integrated with UPI, and volumes are soaring. If one or two banks face issues, the entire network is affected, as all banks interact within a shared ecosystem," one of the sources said.
Users also faced transaction issues on March 31. NPCI attributed these to financial year-end closing activity at banks.
"Axis Bank has continued to invest in its UPI infrastructure. We've upgraded both upstream and downstream systems connected to the UPI stack to keep transaction failures low," said Sanjeev Moghe, president and head -- cards and payments, Axis Bank.
"This reflects in NPCI data, where our technical decline rate was just 0.02 per cent in February 2025," Moghe added.
Outage impact
Outages in UPI services disrupt the broader digital payments ecosystem, particularly financial technology (fintech) companies involved in delivering financial services, as over 80 per cent of digital transactions take place via UPI.
Third-party platforms said they saw partial failures during the outages.
"We saw a 50 per cent failure rate on verification of virtual payment transactions, and around the same share was marked pending or failed on our app," a fintech founder said.
"We couldn't process during the outage, though the issue was resolved quickly," the founder added.
The outages occurred even as UPI hit new peaks in transaction volumes.
In March 2025, UPI processed a record Rs 24.77 trillion across 19.78 billion transactions.
This is the first time UPI's monthly transaction value has crossed Rs 24 trillion and volume has exceeded 19 billion since its launch in April 2016.
For 2024-2025, UPI transaction value rose 30 per cent to ?260.56 trillion, up from Rs 199.96 trillion in 2023-2024 (FY24).
Transaction volume grew 42 per cent to 131.14 billion, compared with 92.48 billion the year before.
Data centre wherewithal
NPCI has data centres in Hyderabad and Chennai and is expanding its technical infrastructure by building more facilities to support growing transaction volumes.
Its annual maintenance charges for network and IT equipment stood at Rs 80.68 crore in FY24, up 21 per cent from Rs 66.61 crore in 2022-23 (FY23).
Network expenses rose to Rs 54.9 crore in FY24 from Rs 36.32 crore a year earlier (FY23).
Maintenance and network costs accounted for a large share of NPCI's total operating expenses, which reached Rs 178.7 crore in FY24.
PAYMENT PAINS
- Success rate of UPI transactions dropped to 50 to 60% during outages
- On March 26, network handled 550 mn transactions, a 7% drop from 581 mn processed the day before
- Industry participants said banks might need to ramp up server-side infrastructure to handle rising UPI traffic
- Users also faced transaction issues on March 31
Feature Presentation: Ashish Narsale/Rediff.com